A powerful parliamentary committee has criticised ministers in the Northern Ireland Assembly for ignoring the plight of the Presbyterian Mutual Society and allowing more than 10,000 members to suffer losses after it went bust.

MPs on the treasury select committee said today they were "surprised and concerned" the mutual was in effect unregulated and that ministers at the Department of Enterprise, Trade and Investment NI (Detini) had failed to put in place a rescue package that protected members.

John McFall, the committee's chairman, said a regulatory gap in Northern Ireland left mutuals exposed to the credit crunch. Regulators told the committee they were powerless to act when the Belfast-based mutual found itself in trouble. However, McFall said it was unacceptable for Northern Ireland ministers to adopt this stance, when they were closest to the situation.

"The committee were surprised and concerned that the department had access to all the relevant information, and yet this did not result in any preventative action or further examination being undertaken. This might well have entailed action in London as well as in Belfast, but as the department closest to the problem, it is reasonable to expect Detini to have taken a lead in identifying the problem, and in seeking a solution," the report said.

The society, which was set up in 1982, closed its doors in October 2008 after worries about its financial stability triggered a run on its deposits. Members stripped the society of savings deposits in a replay of the Northern Rock crisis. Within a few weeks £25m of cash had shrunk to £4m and the society was unable to meet demand for withdrawals.

Society members bought £100 shares in the society up to a maximum £20,000 and received annual dividends. Members could also lend the society money and receive interest in return. The committee said shareholders may be forced to wait until loans were repaid before they could recoup their funds, which was unacceptable.

McFall said: "It is possible that in due time the affairs of the Presbyterian Mutual Society will be unravelled. However, many members cannot wait this long for their money. We heard from some who urgently need funds for medical treatment, some who quite rightly want to enjoy their retirement before it's too late, and others who are struggling simply to meet the necessities of daily life in the current economic climate."